Valuation and Restructuring Requirements for Health Nut essay

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Personal investment of Bregmann and Bury was $5,000. They no longer had credit lines with the bank. Their short and long term liabilities were $25,000 and $21,000 respectively. Bregmann and Bury experienced bankruptcy basing on such reasons:

  • They were too excited – “We see what we want to see” mindset. They neglected the importance of financial and marketing information.
  • Their passion for business led them to borrow more money and invest their savings into their business regardless of its failure from the beginning.
  • Their personal relationship led to self-censorship. Bury did not open to Bregmann about his personal concerns, because Bregmann had a strong passion for the Health Nut.
  • They did not think critically regarding their business. They strongly relied on their personal savings as a source of investment. They also believed that their profit margin would rise by $7850 if they sold jewelry from their suppliers in groups.

Their business did not generate enough markups to sustain them as a whole. The local competition also increased and then Bury became ill. The business’s cash flow was not adequate. It required regular capital infusion, so it stretched its credit line to a local bank. When Bregmann and Bury realized that they are making slightly below minimum wage, they re-opened the Health Nut. Their sales in the first year were half of their projection, because of questionable expenses. Bury’s illness caused a burn through capital in their second year of business. In their third year, they let the passion and emotion interfere with their business decisions. They focused on the vision instead of profitability and sustainability. They did not separate their profession and personal relations.

I would suggest that whenever challenges appear to be charged emotionally, first and foremost, individuals should address their plans of action, concerns and goals. It is necessary to carry out enough research before entering into the business, so that one carries out a business has a competitive advantage. Individuals should also have a clear business plan and essential knowledge on when it is appropriate to take wise risks. Moreover, the business minded persons should be well-aware of their audience and clientele besides upgrading technologically. In the following twenty months, two offers fell through for the business. One was to sublet the retailing space and the other one was to sell the business.

An increase in sales could not still generate enough profit to sustain the business. The couple then tried financing the business using their credit cards, Bury’s pension and credits from suppliers. As a result of the couple’s failure to sustain stocks and inventory shelves, sales declined in early 2007. Consequently, they became bankrupt. At the moment, Bury is recuperating from his illness as Bregmann assists as a manager at Grand Bend Chamber of Commerce and also does some part time job in retail for health products in some other community.

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